# Investment problem

Fernando invested money in a 3 year CD that returned the equivalent of 4.4% simple interest. He invested \$2000 less in an 18 month CD that had 3% return. If the total amount of interest from these investments was \$706.50, determine how much was invested in each CD.

Not sure how to do this.

Does 4.4% simple interest mean each year or at the end of 3 years?

## 1 Answer

It's likely that the interest rates are annual rates. Here are some hints.

Let the amount invested in the three-year CD be $x$. Then the interest earned over three years is $(3)(0.044)x$ ($3$ years, times $4.4\% = 0.044$ per year, times the amount invested).

• If the $18$-month CD had $\$2,000$less invested, how would you express this in terms of$x$? • What would be the interest earned on this CD (following the same idea as for the first CD)? • What is the equation that links the two amounts of interest? (Hint: They add up to$\$706.50$.)

This will allow you to solve for $x$ (the first amount), and then the second amount which is related to $x$.

More explicit hints:

This is the equation to solve for $x$: $(3)(0.044)x + (1.5)(0.03)(x-2000) = 706.50$. Then $x$ and $x-2000$ are the two CD amounts.